Sara Murray: Just because you're small, doesn't mean you can't pack a big punch

Good customer service is not the sole province of large companies, argues Sara Murray, founder of Confused.com. Here are her six top tips for creating a customer engagement strategy to rival the slick FTSE 100 set.

by Sara Murray
Last Updated: 14 Apr 2012

Modern technology has empowered small businesses to be as, if not more, responsive, reactive and personalised in their dealings with customers as their FTSE 100 counterparts. This could be anything from listening out and reacting to dissatisfied customers on Twitter, or sending a birthday mailer when your customer database reminds you its coming up.

I was therefore somewhat surprised to read research from the Epson Business Council finding that only 29% of British small business owner/managers thought that customer service will be a critical market differentiator in the current climate – less than half the number of our European peers. From my experience building Confused.com and my current business Buddi, customer engagement is absolutely vital for building lasting, profitable customer relationships.

In order to be effective in a year of volatility, uncertainty and continued cost-cutting, at home and in business, companies will have to work harder to engage customers and persuade them to stay loyal in a competitive environment.  After all, a cheaper online option is only a click away. So if you’re a micro business and unsure where to start, here are a few suggestions:

Set out your points of differentiation clearly

Being ‘cheapest’ as a point of differentiation can work for some, but for many it is a zero-sum game – businesses need some margin to turn a profit. In a commoditised market, such as the price comparison market we were in for Confused.com, those points of differentiation needed to be explicit. To do this well, you need a fantastic understanding of your customer base – research here is worth its weight in gold. Use those insights to refine your proposition without trying to be all things to all people, and you’ll find you have a more loyal and more focussed customer base as a result.

Before cutting price and margins – look to alternate payment strategies!

Money may be tight, but people are still spending on things they value where they can. If your business model allows, investigate hire-purchase, subscription and leasing purchase options. Customers often prefer the lower up-front cash requirements and the tax benefits these options can bring, and, if you can improve loyalty, it can help reduce your need for more costly new customer acquisition strategies. Crucially, it avoids the need to erode your margins through bouts of discounting.

Face-to-face never goes out of fashion

It’s too easy to get mired in the daily operations of the business and find it’s been weeks since you last spoke to a customer. The Epson research sadly backs this up: in 2011, UK businesses were spending only 29% of their week having face-to-face time with our customers, down on 2010’s figure. Small business growth is underpinned by word of mouth and failing to speak to your customers directly will be detrimental to business growth in the long run. Of course, technology can assist this process but there is no substitute for face to face meetings. If you have to keep things online, use Skype or some other video conferencing service to increase the richness of your interaction.

Take care of your online presence

There’s an unwritten truth that all business owners know about customers; they’ll generally tell three times as many people about an unhappy experience than they would about a positive one. With the advent of social media channels such as Facebook and Twitter, these experiences can be broadcast across the globe within a matter of minutes. Even the smallest of small businesses should set up basic monitoring on the key social networks to ensure that what’s being said about you online can be managed; whether that management involves correcting factual inaccuracies, appeasing unhappy customers, sharing a customer plaudit or just being part of a conversation about an industry you are passionate about.

Include the customer in your product development process

Again, thanks to the advent of social media, it’s possible to engage with customers from the outset of the product development process. If you’re a local café and you found you were selling out of soup one day and not the next, you could engage with your customers – in store or online – about what they liked about one soup or another and evolve your menu accordingly. If you provide products or services to parents, you could engage with your customers on parenting forums to discuss specific pain-points, validate the issues you’re trying to address or evolve your offerings as needs be. Whether you go through this process digitally or in the real world, it’s vital you do it, and play the successes back to the customers.

And finally... Be playful and inventive

There are few things as unexpected and delightful as a business making an effort to get you to smile. Whether that’s a fashion e-tailer getting people to send in images of themselves in their t-shirts and then featuring them as ‘models’ on their website, a surprising act of goodwill, a special and amusing reward for customer loyalty, or a particularly innovative and engaging Facebook app or competition. Coming up with new ways to add value, solve problems, make people’s lives a little easier and sometimes surprising them – can have a huge impact on how people see your brand.

Sara Murray spoke at the 2011 Epson Business Council

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